It isn’t the only issue that’s triggered some contention over the new contract being voted on by members of the International Alliance of Theatrical Stage Employees this week.

But it can be argued that figuring out some kind of equitable residual formula for the relatively new and massively expanding area of made-for-streaming-services shows may have one of the more significant bearings on the futures of grips, editors, cinematographers and thousands of other rank-and-file production workers IATSE represents.

As Netflix and its like take over more and more production, but keep the shows on their services instead of reselling them to other markets, old rerun compensation formulas for talent need to be rethought – and refought.

“As we all know, the game has changed,” noted script supervisor Mari Wilson, a 21-year IATSE member. “We all know that content is moving to the Internet. You have multi-billion dollar corporations – Amazon, Hulu, Netflix – in the game. It comes down to fair share.”

How that can be figured out is problematic, though. Residuals are traditionally payments producers make to talent – and in the case of the IATSE below-the-line workers, their union pension and health care funds – whenever a show is rerun in a secondary market or transferred onto a new media, such as various home video formats once were. Presumably, the copyright owners made money each time that happened, and slices of those profits worked their way to everyone involved in making the show.

But Netflix, Amazon, Hulu and the like make their money off subscribers, not reselling the products they make to other markets. And those subscribers watch those programs on-demand, whenever they want, at no cost beyond their monthly fee. How many times they’re broadcast or units they’re sold as can’t be monetized because those traditional ways of making more money from shows don’t apply.

What the Alliance of Motion Picture and Television Producers, which negotiates contracts on behalf of major studios, networks and production companies with Hollywood’s trade unions, has proposed regarding residuals for the likes of such recent Netflix movies as “Private Life” and “Hold the Dark” in the new, three-year IATSE contract seems pretty paltry on the surface.

The AMPTP did not respond to requests for comments for this article, and no IATSE officials wanted to comment on record for it either. Netflix declined to comment as well.

An IA “Get the Facts” webpage, however, states that a key new media gain is “Full Basic Agreement applies to streaming features with budgets over $30 Million.”

But Local 700, which represents film editors and has taken the unusual move of bucking the national and other IATSE locals’ recommendations to members to vote to ratify the new contract, has a podcast on its website explaining why that’s a lousy deal and members should vote “no”.

“We got potential additional income from new media, but it’s not a residual at all, it’s a one-time payment,” Cathy Repola, Local 700’s national executive director, said on the podcast. “The only movie that they could cite that would even fall into this new formula now was called ‘Bright.’ It’s modeled after features that are streamed and released theatrically. And there’s budget thresholds and it has to be at least 96 minutes long.”

Netflix drops a handful of its feature productions, such as “Bright” last year and the upcoming “Roma,” into handfuls of theaters to qualify them for Academy Awards, making for a potentially small extra revenue generator. Residuals for popular series – Netflix’s “GLOW” and Amazon’s Emmy-winning “The Marvelous Mrs. Maisel” are among dozens and dozens of such shows – don’t seem to be addressed in the proposed contract at all.

Last year, above-the-line unions such as The Directors Guild of America, Writers Guild of America and SAG-AFTRA negotiated wider, more generous streaming residuals for their members with the AMPTP.

“Our residuals work in a different way, they help fund our health and pension, which is hugely important,” noted Marisa Shipley, an art department and set decoration coordinator in Burbank-based IATSE Local 871. “More generally, new media and these streaming companies are a huge portion of the work we have in town. It is vital that they begin with and continue with responsible practices. Those companies, like Netflix, are in a place to do things equitably and take a stance because they are not the old school studios. They do things their own way, and my hope is that their own way is an equitable way.”

As mentioned though, working out equitable streaming residual formulas are a new frontier in the IA’s long history of labor negotiations with producers – which goes back to the 1890s before there even were movies, let alone television, cable and the Internet.

“[Streamers’] consolidation of market power is pretty substantial now. Netflix has more subscribers than most of the major cable providers now, and between them and Amazon, a lot of their success comes from these original programs.

“There’s not just a built-in, natural second market for this content, however,” Holmes said of the made-for-streamers programs. “Obviously, one of the biggest problems is that, because of the way residuals are produced and the way the structure’s been set up until now is that, yeah, there is no second market there. So there’s not that capability of earning money through syndication domestically, internationally and for all these different revenue streams, in addition to DVD sales and all of that kind of thing. Which have really flattened out, so there’s got to be a way to make up for it.”

Fast as the Internet streamers are moving and growing, though, Hollywood guilds have traditionally found themselves behind the curve when it came to getting residuals from new technology outlets. Remember the fights over cable and videocassette profit slices? Developing metrics for quantifying streaming shows’ long value is the toughest challenge yet on that front.

“For so long, there were set rules that were relatively easy to follow,” explained Syracuse University professor of television and popular culture Robert Thompson. “You came up with formulas, you negotiated that formula, and that’s how it worked.

“But as its disrupted so much else, the Internet and new media has disrupted these things as well,” Thompson continued. “The transition from radio to television, which was a big deal, was relatively effortless because the same networks went from one to the other. And even though cable was a broad, new media disruption, that was still kind of old school, it had a linear, comfortably rationalizable system. But it was easier in television and cable, because what you were counting were the number of times this thing aired, and that was an easy thing to count. It’s different now, because the number has to be looked at as each individual subscriber.

“It’s not like that’s an impossible task, though,” Thompson concluded. “Isn’t the whole point of these streaming services to gather data about its viewers?”

Which Netflix and others jealously keep guarded in-house. Still, if some kind of deal was worked out with the above-the-line guilds last year, working class “No” voters on the IATSE contract – who are predicted to be on the losing end when the ballots are tabulated Wednesday – wonder why they couldn’t get something similar.

“There is a metric,” script supervisor Wilson believed. “We’re all followed on the Internet. They know how many users are on Facebook, Netflix is making all of these original shows for a reason.

Other crafts – DGA, WGA, SAG-AFTRA – they have negotiated theirs. But as is typical, the worker bee gets left out.”

Bob Strauss has been covering film at the L.A. Daily News since 1989. He wouldn't say the movies have gotten worse in that time, but they do keep getting harder to love. Fortunately, he still loves them.

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